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Global green bond issuance down in first quarter but rebound expected

Publication Date: 01 May 2018 - By Gaurav Sharma (Associate Editor ReachX) By Gaurav S.

Environmental, Social & Governance Macro Multi Asset Technology Energy Utilities


Global green bond issuance slowed during the first quarter of 2018 compared to the first quarter of 2017, mirroring issuance trends in the broader market, according to a new report from Moody’s. 

In a note to its clients, the ratings agency noted that in the first three months of the year, issuers brought $30.4 billion of green bonds to market, representing an 11.5% year-over-year decline.

"While first quarter volumes suggest a slower pace of market growth, broader fixed income market conditions may have contributed to the decline in green bond issuance," says Matthew Kuchtyak, an analyst at Moody's.

"Most sectors globally saw a material decline in overall bond issuance during the first quarter of 2018."

Despite the dip, a number of developments point to a strong second quarter, underscoring Moody's expectation of the green bond market's continued maturation. Second quarter issuance has gotten off to a quick start in April with a number of significant transactions including a €1.1 billion issuance from the Government of France (Aa2 stable), a €750 million issuance from ABN AMRO Bank N.V. (A1 stable) and €500 million issuances from Berlin Hyp AG (A1 negative) and BNP Paribas (Aa3 stable).

Sovereign green bonds dominated the mix during the first quarter after the Government of Belgium (Aa3 stable) debuted with a green bond for €4.5 billion. The transaction represented the second largest sovereign green bond to date behind France's maiden green bond in 2017. The Government of Poland (A2 stable) brought its second green bond to market, a €1 billion tranche, and the Government of Indonesia (Baa2 stable) issued the first sovereign green sukuk for $1.25 billion.

Other notable developments related to the green and sustainable bond sectors include the launch of the Green Bond Pledge initiative, the announcement of green bond guidelines in Peru and the launch of the Sustainable Blue Economy Finance Principles.

In addition, multilateral agencies continue to support green bond issuance in emerging markets.

"These new developments indicate that the slower-than-anticipated first quarter green bond issuance will represent no more than a minor speed bump on the way to global market growth," says Kuchtyak.

On the policy front, on 8 March, the European Commission published its Action Plan for Sustainable Finance, a broad set of proposals designed to channel capital flows towards sustainable investment, manage financial risks stemming from sustainability issues, and foster transparency and long-term decision making in financial and economic activity. 

This includes creating standards for green financial products, and incorporating sustainability into financial tools, products, risk management policies and non-financial disclosure requirements.

The report also discusses the outlook for the global green sukuk market, which has seen only a handful of deals so far following an issuance in 2017 by Malaysia-based Tadau Energy (Edra Power).

As of March 2018, green sukuk share of overall issuances (green bonds and sukuks) remains very small, at less than 1%. However, green sukuk continues to show promising long-term potential for new issuance, particularly from sovereigns and financial institutions. Indonesia issued the first sovereign green sukuk in the first quarter.


I have no positions in any of the securities referenced in the contribution

I do not use any non-public, material information in this contribution

To the best of my knowledge, the views expressed in this contribution comply with UK law

I agree with the terms and conditions of ReachX

This contribution is for informational purpose and does not constitute investment advice nor is it an offer to sell or buy, nor is it a recommendation for any security.

Gaurav S.


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